US cotton condition fell to 40% in the week ending August 9, 2026, down from 42% a week earlier and far below 53% a year ago. This is the most striking signal in the international cotton market. ICE December futures rose 0.63% to 84.39 cents/lb on August 11, reflecting a weather premium, but the market is still waiting for a key catalyst: the USDA monthly supply-demand report due on August 12.
Background
Drought persists in West Texas and the Mississippi Delta, covering Texas, Mississippi, Arkansas, Louisiana, Missouri, and parts of Tennessee. Rogers Varner of VarnerBrokerage noted that yield risks are accumulating, tightening global supply. More concerning, this year's El Nino is expected to be strong, potentially altering rainfall patterns. The Indian monsoon has already been delayed, with July rainfall likely below average. This is not a short-term fluctuation in one region but a systemic risk across the Northern Hemisphere cotton belt.
The USDA will release updated production and supply-demand forecasts at midnight Beijing time on August 12. The market generally expects downward revisions for US and global production. If confirmed, the current 84 cents level could be just the start; if not, the weather premium may quickly fade. This uncertainty implies higher short-term volatility, and buyers and traders should prepare for two-way risk.
Industry Impact
Rising oil prices add another transmission channel. On August 11, international oil hit a one-week high on doubts about a US-Iran peace deal and concerns over Middle East supply disruptions. Higher energy costs directly raise production costs for polyester and other synthetic fibers, strengthening substitution demand for natural cotton. For textile mills, the cotton-polyester price gap will influence raw material blending decisions and procurement timing.
For China's textile chain, the combination of reduced US cotton output and higher oil prices suggests a rising import cost floor. Cotlook A index stood at 94.45 cents/lb on August 11, down 50 points, but the futures weather premium has not fully transmitted to spot. Given that downstream orders remain largely demand-driven, sustained strength in cotton prices could push up yarn and greige fabric prices, while apparel brands have limited tolerance for price hikes, squeezing margins.